GTA Real-Estate: Will it crash and burn?
Good news doesn’t sell. A phrase that some trace back to Aristotle’s definition of tragedy: “incidents arousing pity and fear, wherewith to accomplish a catharsis of these emotions”.
Some people feel that federal and provincial government actions taken in 2016-2017 to cool off the real-estate market may result in a tragedy unfolding before our eyes. Stricter mortgage rules for home-buyers and a 15% foreign buyers tax will have an impact. As will the January 2018 interest increase of 0.15%. Will these policies result in an end of the real-estate market as we know it?
Let us step back for a moment and take a broader perspective. Fundamentally, what is happening in the Greater Toronto Area is that new people are moving in because they know jobs exist and as a result, they believe that they can create a better future for themselves if they call the GTA home. But their families also need houses and the existing housing stock is depleting quicker than we can keep pace.
The statistics are clear; annual immigration levels project a 2016-2017 increase from 112,000 – 145,000 by 2040–2041, along with an overall population growth (1).. That equates to thousands of people who need a new place to live.
The employment growth has played a key role in bringing new immigrants to Ontario. The unemployment rate in Ontario fell to 5.5% in 2017. Year-over-year employment gains accounted for 181,000 in full-time work (2). Major sectors of the economy, including housing, banking and retail are stronger and more stable because more people have income to pay their bills.
Furthermore, we can not ignore the number of properties sold. From 2005-2014 annual sales ranged from 74,552-92,782. In 2015 the number increased to 101,213. Year 2016 saw a record high increase of 113,040 sales and 2017 ended with 92,394 properties sold (3). We had a record year for price increases and sales numbers but can one or two years become the benchmark? Or is the range from 83,000-92,000 what we should reasonably expect.
In any case demand for housing in the GTA is strong, and as our economy continues to grow, our need for a strong housing supply must also be fulfilled. The only tragedy will be to fail to meet this need.
Written by Andreas Batakis, Real Estate Sales Representative as published originally in the January 2018 issue of Greek Canadian magazine “Voice”
1 Ontario Ministry of Finance, fin.gov.on.ca
2 Labour Force Survey, November 2017, statcan.gc.ca
3 TREB Market Watch December 2017